5 questions about writing a business plan

A case of writer’s block may thwart even the most prepared entrepreneur when it comes to writing a business plan.

But it doesn’t have to be so stressful.

Flexibility is key, according to Susan McCartney. She is longtime director of the Small Business Development Center at Buffalo State College. She and her team of professional counselors work with startup and existing small businesses and and individuals throughout Western New York.

“Great (business) plans are flexible,” she said. “Making strategic adjustments helps a business to survive and thrive.”

McCartney answered five questions from Business First about the basics of writing a business plan:

1 What is the purpose of a business plan?

Susan McCartney: A business plan arms the entrepreneur for survival. Its overarching purpose is to give her or him a competitive and strategic advantage to navigate the constantly changing and often turbulent economic waters. Some call the plan a road map. Others liken it to a check-off list for what’s needed to start and grow a business. Neither reflects its true essence. Great plans are flexible, multi-faceted and operationalize a business in a specific time and place.

2 What are the basic elements of a business plan?

SM: The best plan starts with a vision. It describes how things will look when the business meets its intended goals. The products and/or services need to be described in such a way that most people can understand what the company does.

Market conditions need to be outlined, which includes a competition analysis, pricing strategies and a detailed description of the target market. A communication strategy must be developed for reaching said market. The plan must include a management plan, replete with external advisers, internal managers and job descriptions for nearly every employee.

The final component of the plan is a cash flow projection. This is a fairly detailed analysis of all projected income and expenses. All information must be presented in real time.

3 What are the basic steps involved in writing the plan?

SM: Business planning is a two-part process. The first part entails gathering external information. Think of it as a conditions report. It includes a hard look at the competition, the demographic profile of the target market and an examination of the economic and societal conditions that define the target area.

Part two is more formulaic. Hundreds if not thousands of books on business planning describe how to build a plan. Though fairly straightforward, real planning is far from easy. The business environment ... creates multiple challenges and opportunities.

4 How does one decide what to include, and not include, when writing a plan?

SM: A formalized plan has structure. Its polish reflects its audience. Bankers and investors favor well-written and nicely toned plans. Investors insist that a plan convincingly portray a return on investment. Similarly, bankers expect to see financial data that supports the debt service required to pay back a loan. Business plans that solely guide the entrepreneur require less shine but include all the same ingredients.

5Who should review the plan before it’s finalized?

SM: Many business plans are prepared with the help of specialists. For example, an entrepreneur may ask an attorney to prepare information that addresses the legal issues of the business. Often the entrepreneurs seek help from a business adviser while preparing the plan. Anyone who helped prepare the plan should review the plan before it’s shared with bankers, investors or others. Further, all partners in the business need to review the plan prior to its dissemination. When the plan is intended for internal use only, it is still advantageous to have the plan reviewed. A business adviser often provides such assistance.